(e) Assume that the bank has approved the following financing to Chicks Sdn. Bhd. and full disbursement was made on 10 July 2016: - No Purchase Tenure Type of Financing Market Value Financing Amount (RM) Financing Rate (%) Price 1. Land 2,000,000.00 1,500,000.00 15 years 3.0% 2. 1,000,000.00 800,000.00 15 years 3.5% Factory building Machineries 3. 550,000.00 3.5% 500,000.00 7 years 300,000.00 9 years 4. Vehicle 400,000.00 4.0 % Total 950,000.00 3,000,000.00 3,100,000.00 The company started its operations at the factory with new machineries at the end of January 2015 and recorded a 70% increase in sales for financial year ended 31 December 2015. The performance remains consistent in year 2016 and the company has been prompted in servicing monthly instalment. (1) Suggest ONE (1) type of collateral can be taken by the bank to secure each of the above financing. Calculate collateral value for each of the financing (16 marks) However, the financial performance starts deteriorating in the second quarter of year 2017. Even though the company recorded consistent sales during the financial year ended 31 4 December 2017, the company suffered a significant reduction of 60% in their net profit. Based on your analysis, the raw materials cost significantly increase due to the high exchange rate of Ringgit Malaysia, while the selling price remained the same. The company experienced very tight cash flow to oblige the financing monthly instalment. (g) Based on the above, evaluate the company's condition and formulate the suitable recovery plan. Support your recovery plan with THREE (3) justifications. (15 marks) (e) Assume that the bank has approved the following financing to Chicks Sdn. Bhd. and full disbursement was made on 10 July 2016: - No Purchase Tenure Type of Financing Market Value Financing Amount (RM) Financing Rate (%) Price 1. Land 2,000,000.00 1,500,000.00 15 years 3.0% 2. 1,000,000.00 800,000.00 15 years 3.5% Factory building Machineries 3. 550,000.00 3.5% 500,000.00 7 years 300,000.00 9 years 4. Vehicle 400,000.00 4.0 % Total 950,000.00 3,000,000.00 3,100,000.00 The company started its operations at the factory with new machineries at the end of January 2015 and recorded a 70% increase in sales for financial year ended 31 December 2015. The performance remains consistent in year 2016 and the company has been prompted in servicing monthly instalment. (1) Suggest ONE (1) type of collateral can be taken by the bank to secure each of the above financing. Calculate collateral value for each of the financing (16 marks) However, the financial performance starts deteriorating in the second quarter of year 2017. Even though the company recorded consistent sales during the financial year ended 31 4 December 2017, the company suffered a significant reduction of 60% in their net profit. Based on your analysis, the raw materials cost significantly increase due to the high exchange rate of Ringgit Malaysia, while the selling price remained the same. The company experienced very tight cash flow to oblige the financing monthly instalment. (g) Based on the above, evaluate the company's condition and formulate the suitable recovery plan. Support your recovery plan with THREE (3) justifications. (15 marks)
